The Pears Report: The policy bizarre

Is Australian energy and climate policy beyond rational discussion? Alan Pears reviews recent developments and presents his recipe to improve the effectiveness of appliance Star ratings.

I can’t write this column without discussing the ongoing debacle that is Australian energy and climate policy, although I would much prefer to ignore it.

The Energy White Paper (EWP) has been published (www.ewp.industry.gov.au). It was as awful as I predicted. Anyone who relies on it for business planning will likely lose a lot of money. It is completely out of touch with reality: its focus is on growing fossil fuel exports, ongoing privatisation and outdated approaches to reform of electricity and gas supply.

One potentially significant element of the EWP was the proposal to develop an Energy Productivity Plan. In principle this is a very good idea, as it could drive energy efficiency and improve cost-effectiveness of energy utilisation. But don’t hold your breath. There is no timeframe, no clear institutional framework, nor any firm resource allocation. And the kinds of policy measures needed to implement such a plan are anathema to our present Australian government and the powerful interest groups that dominate energy policy.

We have also had a consultation on the National Carbon Offsets Standard. This is not exactly riveting stuff for most people, but it is very important. It sets the rules on how businesses (and their products) and households can be certified as being ‘carbon neutral’. Unfortunately, the consultation paper forgot to discuss GreenPower, while it focused, instead, on the fine print of the fundamentals. It did not confront the issue of how to ensure voluntary abatement action be treated so that it is ‘additional’ to other abatement action.

From a narrow carbon accounting perspective, almost all Australian voluntary abatement action, including installing rooftop PV, energy efficiency improvement and buying GreenPower, does not reduce Australia’s greenhouse gas emissions. It simply makes it easier for the government to meet its weak target and leaves more room under the target for others to emit more. This is, to put it mildly, disempowering!

We’ve also seen the first auction under the Emission Reduction Fund. The average price polluters were paid to offset emissions was $13.95/tonne. However, few of the funded measures will deliver direct abatement through reducing emissions. Most involve storing carbon or not clearing land. And a fair proportion of this won’t occur before 2020. An unknown amount of it is just a continuation of activities that were already being supported under the previous government’s Carbon Farming Initiative. Environment Minister Hunt continued to use creative economic analysis to suggest this was cheaper and more effective than carbon pricing.

Australian energy and climate policy is just so bizarre that it is beyond rational discussion, I’m afraid. If you want my more detailed views on all this, my submissions are available at the relevant government websites. My Energy Green Paper submission is at www.ewp.industry.gov.au; the White Paper does not change the relevance of my comments on the Green Paper. My submission on Australia’s 2020 emission targets is at www.dpmc.gov.au/taskforces/unfccc and my submission on the national carbon offsets standard is at www.environment.gov.au/climate-change/carbon-neutral/ncos/review

At least there do seem to be some signs that progressive state governments are beginning to move to fill the vacuum created by our truly remarkable national government.

Reframing appliance energy efficiency
To date, Australian appliance energy efficiency policy has focused on new appliances and, within that, on information (via labels) and mandatory minimum performance standards. Despite extremely limited resources, lack of high-level political support and white-anting by anti-regulatory econocrats, this has been a fairly successful approach. As I pointed out last year (www.theconversation.com/energy-smart-appliances-cut-australian-power-bills-by-billions-25816), a typical Australian household is saving around $300 on annual energy bills and the overall cost has been minus $119/tonne of CO2e avoided. Not bad value!

But we can do a lot better. Here’s my recipe for success.

First we need to sharpen and broaden our approach to new appliances. We need simplified labels on a wider range of products such as lamps and fans. Instead of the present label, these would carry simplified Star ratings only, but also carry a QR scan code, so a smartphone user can access background information. For products with relatively low energy usage, it can be difficult to justify a ‘proper’ energy label. But a rating that’s simply printed on packaging has minimal cost. This approach could also be applied to many products like digital photo displays: Choice found that the worst of these were serious energy wasters, but no one knows which are the good ones.

We also need to incorporate automated diagnostic monitoring into new appliances, so they tell us if they are not working properly. This is not hard for modern products that include sophisticated monitoring and computing capabilities. One example that does this is the Siddons Bolt-on heat pump hot water service.

We need to sort out the consistency of messaging via labels. A 4 Star fridge is very efficient, while the best TV or air conditioner is 7 Stars. Our 6 Star homes would be illegal in many countries. No wonder people are confused. And lack of effective promotion of what labels mean allows confusion to be misused by salespeople. For example, a home salesperson might tell potential buyers that a house is 6 Stars, so they don’t need to think any more about energy efficiency. Unfortunately that’s not the case.

Our mandatory performance standards are generally weak, as shown by the wide range of Star ratings of products on the market. We could adopt stronger approaches. For example, the Japanese ‘top runner’ program requires all products to be at least as efficient as today’s best performer within a few years. Or we could just say that anything using more than twice as much energy as ‘best on market’ is illegal!

We need to look beyond new products. Many people buy secondhand products, but there is no information on their energy performance. As a basic step, requiring energy labelling consumption data to be included on appliance specification plates seems obvious. At least the secondhand retailer or enthusiastic buyer could gain access to the information. We could go further and require all registered secondhand sales agents to place clear information on energy use on appliances they sell—using the information on the specification plate as a source.

We also need to remove old, inefficient equipment from the stock. Old, often faulty fridges can use up to eight times as much energy as modern equivalent products. Many industrial boilers are up to 50 years old, and appallingly inefficient. Replacing (and recycling the materials from) these items would deliver big environmental and economic benefits, while cutting consumer energy costs. But we need to be able to identify such disasters. This can be done by analysing energy usage data, but it will require some effort by governments and energy companies. At present, energy suppliers have little incentive to do this.

Lastly, we need to be thinking in lifecycle terms. Apple, for example, includes full lifecycle analyses of all their products on their website. For efficient products such as iPads, embodied emissions comprise over half of lifecycle impacts. Operating energy use is only 15%.

More broadly, one Australian study suggested that effective recovery and recycling of waste materials, particularly metals, would cut Australian greenhouse gas emissions by over 5%. And the concentration of valuable rare metals and other materials in wastes can be tens of times higher than in ores we now mine. Failure to capture and use these valuable resources and energy savings is just dumb.

But when neo-classical economic theory and powerful incumbent groups drive policy, it’s not surprising that we end up with dumb policies.

Alan Pears is one of Australia’s best regarded sustainable energy experts. He teaches part-time at RMIT University and is co-director of Sustainable Solutions, a small consultancy.